How Companies Weather the Flood of Eco-Labels

How Companies Weather the Flood of Eco-Labels

With the side-by-side rise in consumer demand for green products and companies seeking ways to reduce the impacts of their products and services has come a flood of eco-labels: According to a recent article in the Washington Post, there are more than 600 such labels worldwide, and 80 in the United States alone.

Many of these labels are vastly different; comparing an Energy Star product to a Fair Trade product is quite a bit more complicated than apples to oranges (both of which, of course, could earn the USDA's Organic label as well as the Fair Trade label). And other labels cover much the same turf, but with fine distinctions that can drive shoppers to distraction -- take as an example the FSC vs. SFI dustup currently underway in the world of green buildings.

Earlier this month, the environmental group Rainforest Alliance held a daylong event highlighting the voluntary green economy, made up of sustainability certifications as well as corporate and individual environmental practices. As part of the event, RA handed out awards to companies that it calls "leaders in sustainability" for their work with Rainforest Alliance.

Rainforest Alliance offers one of the aformentioned 600 green labels -- Rainforest Alliance Certified. And in the course of creating its daylong event in New York, the group brought together not just its award winners, but also representatives from a number of world-leading companies to share their success stories and help other firms benefit from the growth of the green economy.

The GreenBiz.com editorial staff talked with some of these leaders to find out how businesses large and small address the glut of eco-labels. Below are excerpts of interviews conducted by Jonathan Bardelline, Leslie Guevarra, Tilde Herrera and me.

Green from the Ground Up

One of the winners of Rainforest Alliance's Sustainable Standard-Setters awards for 2010 is Willamette Valley Vineyards, which was honored as the first winery to use only FSC-certified cork for its bottling.

While the FSC certification for its corks is far from the only sustainability project the winery has undertaken -- it also bears the Salmon-Safe and LIVE (Low Impact Viticulture and Enology) certifications, as well as some organic acreage -- corks represent a key element of its green efforts.

"It fits our overall holistic approach. It seemed pointless to make wine naturally and then put it into a container that damages the environment," Jim Bernau, CEO of Willamette Valley Vineyards, told Tilde Herrera. "We're trying to make sure our packaging, to the extent we possibly can, is made as sustainably as possible."

And communicating those efforts to shoppers is important to WVV, Bernau (pictured at left) said. "I do believe there is a segment of population where this is really import to them. They really get it. It impacts their shopping choices."

In addition to getting its wines on those shoppers' radar screens, highlighting green certifications can also shift markets.

"Consumers can virtually change the world," Bernau said. "It doesn't take very many of them. If they can change the demand by 15 percent, you're going to get a CEO's attention."

But WVV is also taking a somewhat unexpected route for eliminating label confusion: It's part of a new label certification, Oregon Certified Sustainable Wine. "The intention was to eliminate the confusion the consumer was faced with," Bernau said, explaining that the OCSW label means that the wine itself was certified under at least one of five certifications: LIVE, USDA Organic, Demeter Biodynamic, Food Alliance and Salmon-Safe.

"Our trade customers kept telling us to keep it simple and send a unified message -- all the different certifications were confusing to their customers," Bernau said.

Even with the umbrella certification of OCSW in place -- it launched in April -- WVV had to choose which certifications it would earn, and LIVE met the bill for what Bernau described as broader protections for the environment, including restrictions on water and pesticide use, and an emphasis on soil conservation and biodiversity.

"his approach provides broader protection to the environment, recognizes agricultural variability and is certified by third party inspection including soil and plant testing," Bernau explained.

The Value Citigroup Places on Eco-Labels

I spoke with Bruce Schlein, vice President of Corporate Sustainability at Citigroup, about the company's work with Rainforest Alliance. As an internal advisory group to Citi's businesses, operations and foundations,Schlein said that certifications are critical to his work, most importantly with regards to evaluating whether projects meet Citi's environmental and social risk policies.

"We rely on [certifications] in terms of how we evaluate various project financings," Schlein explained, offering the example of whether or not Citi would fund a pulp and paper mill. "In that respect, standards are important, in terms of the infrastructure that's needed to translate social and environmental benefits on the ground up through a supply chain."

Schlein said the proliferation of eco-standards is a big challenge for his work, because of the layer of complexity that competing and emerging standards can bring to evaluating projects.

Regarding the explosion of the number of standards, Schlein said, "I think it reflects a desire for organizations to reflect environmental and social conditions on the ground that are unique to a particular geography or a particular sector."

But one challenge for evaluating certifications is that the products they cover live as part of a supply chain, and part of his work at Citi is to incorporate standards that can bring value to a wide range of constituents -- for example, Starbucks as a buyer of Fair Trade certified coffee as well as the needs of just one of its growers.

"You can imagine that while climate change is a critical global issue, it's probably not top of mind for a small-hold coffee grower in Ecuador," Schlein said. "We're trying to be mindful as we think of how you balance livelihood outcomes for people at one end of a supply chain and the goals and aspirations of a purchaser of a commodity at the other end of that chain."

One way Citi has worked to strike that balance is to identify those standards that meet as many needs as possible and use them as benchmarks for measuring other certifications. Schlein said Citi uses the Forest Stewardship Council's certification for forestry projects -- or its equivalent if FSC has not made it to a certiain market -- and the Marine Stewardship Council's certification for projects that can impact fisheries.

"At the end of the day, what's critical is behavior on the ground," Schlein said. "The onus is on groups like Rainforest Alliance and companies like Starbucks that partner with them to develop standards that take into account the different goals and objectives.... The farmer on the ground may have a particular viewpoint about what the benefits are to their community, as compared to customers of Starbucks Coffee."

Kraft Moves Sustainability to the Center Aisle

Kraft is the world's largest purchaser of Rainforest Alliance-certified coffee beans, as well as a large corporate purchaser of cocoa from Rainforest Alliance-certified farms for its Cote D'or and Marabou brands. And according to Steve Yucknut, the vice president of sustainability at Kraft Foods, the company's use on certified green products is on the rise.

"We're at a juncture in the society where certification has moved out of the niche and into the center aisle," Yucknut said in an interview with Leslie Guevarra.

When it comes to choosing between the many certifications to pursue, Yucknut said Kraft bases its decisions on a combination of factors.

"In the agricultural commodity space there are clear candidates that prestige and longevity," he said, pointing to Fair Trade and Rainforest Alliance and Utz as three of the leading certifications.

Yucknut said Kraft decided to work with the Rainforest Alliance for coffee and cocoa because "It is very balanced and it very comprehensive, it's rigorous and it has an audit mechanism that is robust, thorough and very objective -- it's a well designed, third-party verification system."

The Rainforest Alliance name, symbol and reputation also are important to Kraft, Yucknut added. The label with the green frog is easily recognizable and its message is easy to understand. It tells the customer "this is what the symbol stands for, this is why you should consider this, instead of alternatives, when buying this product."

Regardless of the label, Yucknut said that there are three elements that are integral in conveying a sustainability message that will inform shoppers: The front of the pack, the back of the pack and a company's website

The label on the front needs to provide "unaided recognition, [be] telegraphic, break through" to the customer, he said, then the basic story needs to be told in a short, simple way on the back of the pack. "And for the really dark green consumers, the package points to the website where there is full disclosure."

The growth of green labels has upsides as well as down. Although he said that there is a level of label confusion in the consumer space, having more labels tends to encourage innovation in the types of practices and concerns that green labeling can cover.

But ultimately, natural competition among certification options and the marketplace will determine the dominant labels with consumers being the key to how companies pursue sustainability in sourcing.

"'Really, it all depends on consumers," Yucknut said. "Companies can want what's right, but if the consumer doesn't reward that choice ..." The challenge, then is for companies to be "extremely authentic and extremely transparent" in identifying why sourcing choices were made by firms and what benefits can result from them.

Marks & Spencer Narrows Its Focus on Labels

For Marks & Spencer, one of the largest and broadest retailers in the United Kingdom, the number of certifications that cover the producs on their shelves is overwhelming. But the company, whose "Plan A" sustainability project is one of the retail industry's gold standards, has focused on a few major certifications to guide their purchasing.

Mike Barry, M&S's Sustainable Development Manager, told Jonathan Bardelline that surveys have shown that shoppers value green labels, "but they don't want to see too many labels." So the company focuses on five certifications: Organic, Fair Trade, Marine Stewardship Council, Forest Stewardship Council, and Rainforest Alliance.

"We sell products that could already have four or five labels on them, and four or five more in the future, and that is too much information to put on there for consumers," Barry said.

Marks & Spencer is in a unique position, though, because 99 percent of the products M&S sells are its own brand, according to Barry. The company has therefore focused its certification efforts on building inherent trust in the M&S brand itself.

While some customers are engaged in looking into products and finding things out on their own, Barry said the majority of customers want the brand to do most of the work for them.

That results in a strong incentive for the company to work with its suppliers to achieve and adhere to certification standards. "Every single one of your suppliers has to be aligned with this," Barry said, "and that's a big journey."